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Lincare, Inc. has agreed to pay the United States $5.25 million to settle claims that it violated the federal False Claims Act. This is perhaps the first False Claims Act recovery for claims brought by a whistleblower against a medical provider for misappropriating federal funds under the Medicare Advantage program, where claims are paid by private insurers, whose health insurance plans are funded by the federal government.
Lincare, which is headquartered in Clearwater, Florida, sells and leases various forms of durable medical equipment (DME) to customers throughout the United States, including to Medicare beneficiaries. One type of DME that Lincare provides to its customers is home oxygen equipment and supplies.
Brian Thomas had previously been employed in a billing office of Lincare in Lawrence, Kansas. Acting as a whistleblower on behalf of the United States, on July 6, 2015, Mr. Thomas filed a lawsuit in the United States District Court for Southern Illinois alleging that Lincare had defrauded the United States by submitting unlawful claims for home oxygen equipment and supplies under the federally-funded Medicare Advantage program (also known as Medicare Part C). Brady & Associates of Kansas City and Downey Law Group LLC of St. Louis represented Mr. Thomas in the case.
One of Lincare’s largest competitors in the home oxygen business is Apria. Humana, a health care insurance company, administers various federally-funded Medicare Advantage health insurance plans. Mr. Thomas alleged that Humana successfully negotiated with Apria to accept lower payments from Humana’s Medicare Advantage plans for home oxygen equipment and supplies than the rates Lincare charged Humana’s Medicare Advantage plans for similar DME. Apria’s agreement to accept such discounted reimbursements from Humana had the effect of reducing the federal government’s cost of funding such Medicare Advantage home oxygen benefits, and also resulted in the beneficiaries of Humana’s Medicare Advantage plans paying lower co-payments if they received their home oxygen equipment and supplies from Apria rather than from Lincare. Mr. Thomas alleged that to avoid losing market share to Apria as to customers covered by Humana-administered Medicare Advantage plans, Lincare partially waived the co-pays it charged home oxygen customers covered by Humana-administered Medicare Advantage plans to essentially match the co-pays they would pay if they received their home oxygen from Apria. Lincare, nonetheless, continued to receive reimbursements higher than those received by Apria from Humana’s federally-funded Medicare Advantage plans for such DME. Mr. Thomas alleged that reducing such co-pays for the purpose of influencing customers’ decisions as to whether to purchase or lease their home oxygen equipment and supplies from Lincare, rather than from Apria, violated the federal Anti-Kickback Statute, which rendered Lincare’s submissions for payments from Humana-administered Medicare Advantage plans for such DME unlawful under the False Claims Act.
After Mr. Thomas filed the lawsuit, attorneys for the United States Department of Justice investigated the matter and intervened in the case on August 8, 2018. Pursuant to the terms of a recently finalized settlement agreement, Lincare has agreed to pay the United States $5.25 million. For his efforts in filing the lawsuit on behalf of the United States and assisting the United States in the recovery, Mr. Thomas was awarded $918,750, which was 17.5% of the government’s recovery in the case.
This case appears to be one of the first successful False Claims Act whistleblower cases alleging that a health care company submitted improper claims for payments from the Medicare Advantage program. Although Medicare Advantage plans are federally-funded, health care reimbursement claims under Medicare Advantage are paid by private insurance companies like Humana, not by the federal agency that pays claims under “traditional” Medicare (known as Medicare Parts A and B). Congress amended the False Claims Act in 2009 to expand its reach after a Supreme Court ruling limited False Claims Act violations to claims for payments submitted directly to a federal agency. The 2009 amendments to the False Claims Act appeared to expand its scope beyond claims submitted directly to the government to reach claims to defraud any federally-funded program. The Department of Justice agreed with Mr. Thomas and his attorneys that under the 2009 amendments to the False Claims Act, submissions of improper claims to Medicare Advantage plans can violate the False Claims Act, even though those claims are paid by private insurance companies with funds received from the government, rather than being paid directly by a government agency itself.
The federal False Claims Act provides incentives for private citizens with knowledge of fraud against the United States and any of its agencies to come forward. Such whistleblower lawsuits must be filed “under seal” to allow the United States Department of Justice an opportunity to investigate prior to any public disclosure of the lawsuit. If the United States Department of Justice intervenes in the case, the False Claims Act generally provides for the whistleblower(s) to be awarded a share of between 15 percent and 25 percent of the United States’ recovery.
If you want additional information or may have evidence about other misappropriations of federal funds, please contact Mr. Thomas’ attorneys, Michael Brady, Mark Kistler and Sara Ballew at Brady & Associates, 10985 Cody Street, Suite 135, Overland Park, Kansas 66210, or by phone, at 913-696-0925.